The fastest way a candidate for elected office can get into trouble is with money.
Now I’m not talking about stealing money from the campaign account or using campaign funds for personal purposes, though that does happen and gets people into a lot of trouble.
The type of trouble I’m referring to here is the kind that honest candidates can get themselves into that involves their campaign financial disclosure statements.
While many candidates running for local office think they handle their own reporting, it is a huge mistake to do so.
Filing and disclosure laws are many and their are nuanced. Making an unintentional mistake in reporting is easy and common.
Yes, you may be saving a few bucks by filling out the forms yourself, or having your spouse for friend do it, but you may pay for it later — in both time and money.
Inaccurate campaign finance disclosure statements can lead to governmental investigations and inquiries. Errors sustained can result in stiff financial penalties, sometimes worse.
That’s why I always want the candidates I consult for to hire a professional campaign treasurer. It avoids a lot of headaches and a lot of problems.
To go deeper into this issue, I interviewed Carla Bailey, a campaign compliance expert who works with the Law Offices of Wayne Ordos.
Carla Bailey worked for 33 years at the California Fair Political Practices Commission (FPPC) which is charged with regulating political activity in the State of California.
She served as Chief of the FPPC’s Technical Assistance Division and was gracious enough to share her expertise as to why candidates should hire professional treasurers for their campaigns.
She also shares some tips on what you should be looking for in a potential treasurer and questions you will want to ask them.
Many people running for a local office do not want to hire a professional campaign treasurer. This makes sense from a budgetary point of view as most local campaigns do not have a significant amount of money.
Why would a candidate want to hire a professional campaign treasurer rather than act as their own treasurer or have a spouse or good friend volunteer to keep the books and serve as treasurer?
The state campaign finance laws in California are very complex. There are many deadlines for filing reports that can easily be missed.
For example, during the 90 days prior to the election, contributions of $1,000 or more must be reported within 24 hours. In addition, detailed reports of all financial activity must be filed on time before and after the election.
The law also requires very detailed reporting of all money received and spent, as well as for contributions of goods and services.
The treasurer must report the street address (not a Post Office box number) for contributors to the campaign.
For contributors who are individuals (as opposed to businesses), the treasurer also must report the contributor’s occupation and the name of his or her employer.
Reports also must include detailed information about payments made (including unpaid bills). When payments to certain vendors are reported, additional information is required for “subvendors” that provide services such as printing, postage, and advertising services through the original vendor.
The treasurer must maintain detailed records of all financial activity. In addition, some cities and counties have adopted their own rules and restrictions, which are in addition to the state law.
A treasurer (including a volunteer treasurer) can be fined for failing to file reports on time and for failing to accurately disclose the required information.
Fines of up to $5,000 per violation can be imposed by the state Fair Political Practices Commission; reports filed after a deadline can also be subject to fines of $10 per day until filed.
A professional treasurer will be familiar with the deadlines and reporting requirements and will ensure that reports are accurate and filed on time.
What are the most common problems that candidates run into when serving as their own treasurers or having a non-professional person handing the responsibility?
Most often, candidates and treasurers are fined for failing to file required reports and for failing to accurately disclose the information that is required to be reported.
Candidates often make the mistake of spending personal funds on the campaign without first depositing the funds into a separate campaign bank account.
If a candidate wants to hire a professional treasurer, is there a downside to them using their CPA or tax accountant to handle their campaign finances and reporting?
The candidate must ensure that the CPA or tax accountant is able to learn and comply with the reporting requirements. If the CPA or accountant is not familiar with the reporting requirements, the candidate should hire a professional treasurer.
What type of questions should candidates ask potential professional treasurers when they are looking to hire one?
The candidate should ask whether the treasurer has experience with the size of campaign the candidate intends to run and whether the treasurer is familiar with any local rules that may apply. He or she should also ask whether the treasurer or any of his or her clients have been fined for violations of state or local campaign finance laws.
What duties should a treasurer once hired be performing for the candidate?
The treasurer should receive and process all contributions, pay all expenses, keep required records, and file required reports.
In your opinion, what is the biggest benefit to a candidate for hiring a professional treasurer?
The candidate is much less likely to be fined for violations of campaign finance laws. In addition, the candidate can spend more time on the campaign rather than paperwork.
Most professional treasurers are members of the California Political Treasurers Association and can be reached at www.californiapoliticaltreasurers.org.